OECD: Brexit could send shock through global markets

The world’s economy is ensnared in weak growth and vulnerable to falling into another deep downturn unless governments take urgent action, the Organization for Economic Cooperation and Development stated on Wednesday.

Releasing its semiannual economic outlook, the Paris-based organization amplified its call for governments to stimulate their economies by expanding investment and implementing policies that fuel competition, increase labor mobility and strengthen financial stability.

“The need is urgent,” OECD chief economist Catherine Mann said. “The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops,” she added.

The OECD said global economic forecasts have fallen by around 0.3 percentage points in six months.

The organization lowered its growth forecast for the combined economy of the 34 OECD countries to 1.8% this year and 2.1% in 2017 from 2.2% and 2.3% respectively in November.

The OECD singled out the possibility of the U.K. voting to leave the EU in the June 23 referendum as a “major downside risk” that could have substantial consequences for the country, the EU, and the rest of the world. If the U.K. voted to exit the EU, it would hurt economic growth and send shocks through global financial markets, the OECD said.

Source: MarketWatch